Panelists question fabless model viability

Is fabless still fabulous? In a panel session at the IP-ESC 2009 Conference this week in Grenoble, France, panelists discussed the evolution of semiconductor business models and confronted views on whether the fabless model is dead or alive and kicking.

Today's reality is that complexity is growing, opportunities to learn are reducing and everything is converged, said Kalar Rajendiran, senior marketing director at eSilicon. "To make a chip, you need 40 expertise and proficiency domains to master. You have 100s suppliers and potential partners to choose. Thus, it is harder than it looks, and the 'Do it yourself' is dead. These trends are forcing new business models."

Moving to eSilicon's core business, Rajendiran said "eSilicon's Value Chain Producer (VCP) model has it all today so we can address the industry and help it grow."

To the question "Is the fabless IC model alive and vital", Stan Swirhun, senior vice president & general manager, Optical Products Group, Zarlink Semiconductor, answered "yes and no" as it depends on size, business focus and maturity.

There is a decreasing number of fabless startups, and Swirhun said VCs are increasingly taking a low-capital vision and, eventually, funding for fabless startups continues to decline.

To succeed, small and mid-size fabless companies must reduce operating risk by owning a great technology or market, by focusing on a long-lived product and by focusing on a core capability. He also encouraged to serve existing customer relationships, to rely on narrower internal capability and hired experts, to rely on partnerships for differentiation and cost benefit, and finally to continue to explore 'own less/risk less' business.